WASHINGTON, March 26, 2012 -- While supporters and opponents of the Affordable Care Act demonstrated outside at the Supreme Court today, inside the majestic chambers the nine justices heard arguments regarding whether it was premature for the court to hear a challenge to the health care law.
The arguments today are the first of four to be heard over the next three days concerning the signature legislative achievement of the Obama administration.
"This case presents issues of great moment," said Solicitor General Donald B. Verrilli, who urged the court to reach the merits of the case and decide by July whether a key provision of the law, the individual mandate, is constitutional. The individual mandate requires most individuals to buy health insurance by 2014 or pay a penalty.
At issue today is a federal law, the Anti-Injunction Act (AIA), that says, in essence, that a taxpayer cannot challenge a tax, at a minimum until it comes into effect.
The AIA, enacted in 1867, says "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person." It was passed to protect the government's need to assess and collect taxes as expeditiously as possible with minimum interference from the judiciary. If the court were to decide that the AIA applied to the individual mandate, any review of constitutionality of the mandate could not be addressed until after the mandate goes into effect in 2015.
But several of the justices seemed skeptical of arguments that the AIA would bar a challenge to the individual mandate.
Justice Stephen Breyer pointed out that Congress had not used the word "tax" to describe the penalty associated with the individual mandate.
"Congress has nowhere used the word 'tax,'" Breyer said. "What it says is penalty.
"And so why is this a tax?" he said.
What is unusual in the case is that neither the government, nor the challengers of the law -- 26 states, the National Federation of Independent Business, and four individuals -- believe the AIA should apply. Because of that, the court appointed a lawyer to argue that particular issue.
Robert A. Long Jr. of Covington & Burling told the justices that the penalty associated with the minimum coverage provision falls within the ordinary meaning of a "tax."
"The Anti-Injunction Act imposes a pay first, litigate later rule," Long argued. "The act applies to essentially every tax penalty in the Internal Revenue Code."
Long told the justices that Congress knows how to create an exception to the Anti-Injunction Act, and it chose not to.
The justices peppered Long with detailed comments, and none seemed particularly receptive to his arguments.
Justice Antonin Scalia said that it wasn't clear that the AIA barred a challenge to the law.
"Unless it's clear, courts are not deprived of jurisdiction. Whatever else it is, it's easy to think that it's not clear," he said.
Verrilli argued that "Congress has authority under the taxing power to enact a measure not labeled as a tax, and it did so" when it enacted the individual mandate.
The government's position caused Justice Samuel Alito to bring up the arguments scheduled for Tuesday concerning the constitutionality of the individual mandate. The government is expected to argue Tuesday that Congress was well within its taxing power to pass the mandate.
"General Verrilli, today you are arguing that the penalty is not a tax. Tomorrow you are going to be back and you will be arguing that the penalty is a tax," Alito said.
Verrilli was quick to point out that the nature of the argument Tuesday is different.
"Today we are construing statutory text where the precise choice of words does have a dispositive effect on the analysis," he said. "Tomorrow the question is whether Congress has the authority under the taxing power to enact it and the form of words doesn't have a dispositive effect on that analysis."
Gregory G. Katsas argued on behalf of the 26 states as well as the National Federation of Independent Business, and four individuals challenging the law. He said he is challenging the mandate, not the penalty provision of the law and that the AIA should not block the challenge.
"The purpose of this lawsuit is to challenge a requirement -- a federal requirement to buy health insurance. That requirement is not a tax," he said. "And for that reason alone, we think the Anti-Injunction Act doesn't apply."
Chief Justice John Roberts dismissed a differentiation between the mandate and the penalty.
"The idea that the mandate is something separate from whether you want to call it a penalty or tax just doesn't seem to make much sense," he said.
While most of the attention to the health care debate has centered on the law's individual mandate and its expansion of Medicaid, tax experts are keenly interested in how the court will address the Anti-Injunction Act. They are particularly interested in the government's position that the AIA shouldn't apply to the health care law.
George A. Hani, a tax law expert at Miller & Chevalier, says that if the government wins its argument that the AIA shouldn't apply in this case it could bring more challenges to other tax laws that previously were believed to be barred by the AIA.
"If the government wins on its AIA argument, tax practitioners will seize the language with the eye toward bringing additional challenges to the tax law which previously were believed could only be brought after assessment and collection," he said.